BrianLR

I have read at Expat Tax Online about the need for a US Citizen owning a UK SIPP to file this as a Trust with IRS forms 3520 & 3520A. Is this accurate, is it really necessary?

If so having read the IRS filling forms its says "File a complete Form 3520-A ... by the 15th day of the 3rd month after the end of the trust's tax year. "

As I opened my UK SIPP at the end of 2022, does that mean I need to file a 3520A by 15 March 2023 or as the UK tax years end on April 5th 2023 that I do not need to file the 3520a until 2024?

Glasgow Girl

File Form 8938 with your tax return instead of Form 3520 (even if you don’t meet the Form 8938 threshold). Some folks say you should file Form 3520 rather than Form 8938 but the IRS has never provided definitive guidance on that, and no one has ever been prosecuted for filing Form 8938 instead. Form 3520 is a very complex form to complete whereas Form 8938 is very easy. If you had a SIPP in the 2022 calendar year then you need to report it on your IRS 2022 tax return due this year. Also, you will need to file on an FBAR is it exceeds $10,000.

porkedpie

Several specialist sites online seem to agree with Expat Tax Online (e.g.) although it is clearly a grey area and others say they are only needed once you start distributions.
FWIW, my company paid for tax services from a Big 4 firm and when I specifically asked them about 3520 & 3520A (since I have a SIPP), they said it was not necessary since it's already on 8938 and FBAR.
The letter of the law and "clarification" Revenue Procedure 2020-17 is very murky. The risk appears low since you are clearly not hiding anything from the IRS (as it is on the 8938), since there is no tax implications and since the spirit of the law does not seem to be aimed at UK personal pensions.

Glasgow Girl

Yes, the specialist sites make a LOT of money completing Form 3520, so they would agree and promote that it is required!

BrianLR

Thanks for confirming what I thought was most likely the case, that also fits with what another expert contact of mine tells me.
In what section on the 8938 would the SIPP go, I was putting it as "Other Foreign Assets" as with LGS & AVC Pension?
And on FinCEN Form 114 in Part II Information on Financial Account(s) Owned Separately?

Glasgow Girl

For Form 8938 I include in Part 1, and Part II of the FBAR. It is probably more accurate to include in Other Foreign Assets on the 8938 as you suggest but I don’t think they really care so long as the account is declared. I have never had any issues and have reported since the requirement was first introduced,

Cook_County

This guide from EY: How to keep UK pension savings tax efficient in the US | EY UK says that 3520s may be required "in the case of SIPP’s formed under a deed of Trust". This is the prudent reading followed by most accountants who specialise in this area.

PMG61

I am confident that for a typical SIPP account with an investment manager like AJ Bell, the 3520 form is not required. I had forgotten about my UK pensions for several years and then transferred some employer pension plan to a SIPP which prompted me to investigate the requirements in detail. I consulted a tax lawyer and he advised that in my case of a simple SIPP investment account, I didn't need to file 3520 or 3520A, as these accounts weren't trusts in his view. As I understand it, one could have a customized SIPP into which one placed all manner of assets and one would imagine that such a SIPP would be formed as a trust. Why it would be advantageous to do so with the UK lifetime limit on pension plan value is unclear to me. But at any rate, I think that it's those kinds of arrangements for which the IRS might want form 3520. I file 8938 and the FBAR forms and so far (three years) have had no problems.